Tuesday, May 17, 2011

A microcredit co-operative with indigenous roots

One of the strengths of microcredit was the close relationship the lender had with the borrower. Some of the microcredit banks made sure that the loan helped improve the borrowers life instead of put a bigger burden on them. Grammen and similar microcredit banks made sure that borrowers made commitments to improve their health and education as well as using the loan to improve their business. Each borrower belonged to small groups that helped each member meet these commitments as well as their payments.

We are now seeing this communal aspect of microcredit being taken a step further. Small cooperative savings and loans are staring up without a big central bank controlling the money. Members of the group will contribute to a pot of money that members can later borrow against when needs arise. We linked to a story about one such cooperative in Kenya not long ago. Today, we find a story from the Inter Press Service on one in Argentina. Writer Marcela Valente says some aspects of the cooperative have roots in the Aymará indigenous tradition.

Abra Pampa is the capital of the department of Cochinoca in the arid altiplano region of La Puna, whose scarce population is mainly of indigenous origin, as is Brajeda, a Kolla Indian who, as she says, "was born and will die here."

"You'll laugh if I tell you how much money each of us puts into the pool. It might be 30 or 50 pesos (between seven and 12 dollars) and once in a while up 100 pesos (24 dollars). The money then goes to whoever needs it," she said.

The loans are small, up to 5,000 pesos (1,200 dollars) at the most. "Anyone who wants more has to go to the bank," Brajeda laughs. The interest rate is nine percent, and has remained stable since the fund was created seven years ago.

"Our group gives out loans monthly. If we don't have the amount someone requests, we continue to collect until the next month. And the small interest fee we charge is so that the capital will not run out, so that there will always be something there," she says.

Brajeda says the system is a way "to help ourselves without so much paperwork or red tape." The money goes towards purchases of yarn or thread for weaving work, antibiotics, school supplies or shoes. "It's a big help," she emphasises.
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The original adviser to all of the projects was anthropologist Raúl Llobeta.

"This programme was conceived of from an anthropological, rather than market-oriented, viewpoint," Llobeta, a professor at the National University in Jujuy and an adviser to several Avina Foundation projects, tells IPS.

One of his studies found that South America's Aymará indigenous people used to have a financial institution: the "pasankus" – a trust-based community system of savings and credit.

The old system was recreated "to strengthen the self-esteem and cultural identity, and the political and social organisation, of local communities, and it also serves as a financial lever to break the circle of poverty," he says.